Here's Everything We Know About The GlaxoSmithKline Sex Tape And The Chinese Bribery Allegations (GSK)

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By Jim Edwards

The Herald News, Fall River, MA

By Jim Edwards

Posted Jun. 30, 2014 at 9:56 AM

By Jim Edwards
Posted Jun. 30, 2014 at 9:56 AM

» Social News

For the global pharmaceuticals giant GlaxoSmithKline the headlines couldn't be worse: Mark Reilly, the British chief of its China division is trapped in that country facing bribery allegations — charges which may well be false.

The company has received a secretly recorded video of Reilly having sex with his girlfriend. And the private detective that Reilly hired to figure out who had planted a camera inside his apartment is in a Chinese prison, where he has made a ritualistic forced confession on Chinese TV.

Meanwhile, an as-yet anonymous whistleblower is sending GSK executives stunning emails claiming that GSK paid up to £283 million in bribes to Chinese doctors to prescribe its medicines.

The U.K. Serious Fraud Office opened an investigation into the bribery allegations in May, according to the Financial Times. A U.S. investigation may follow, presumably under the Foreign Corrupt Practices Act. Criminal charges may be filed.

The story starts in 2012, according to the Sunday Times, when 23 anonymous emails were sent to Chinese authorities alleging that doctors were being bribed with the knowledge of GSK management there.

Inside GSK, management suspected that Vivian Shi, the company's head of government affairs, sent the emails. There was no evidence, but GSK investigated her travel expenses and eventually she left the company sometime after October 2012 along with her boss, John Lepore, who joined media group Reed Elsevier as head global government affairs. (There are no allegations of wrongdoing against Lepore or Shi. Neither of them immediately returned a message from Business Insider requesting comment.)

At that point, GSK asked Reilly to take over GSK China even though he did not speak Chinese. This is what happened next, according to The Sunday Times:

ON JANUARY 16 last year the allegations returned, but closer to home. A bombshell email landed in the inboxes of 13 executives at Glaxo and two people at PwC, its auditor. This time it was in perfect English.

Sent by “gskwhistleblow–er@gmail.com”, it was headlined: “Notification of bribery by GSK in China.”

The allegations were extensive and granular in detail. The whistleblower alleged Glaxo falsified its books and records to conceal illegal marketing practices. It allegedly operated a “pervasive cash advance bribery scheme” under which a Citibank (China) account was used to send £1,000 a month to the bank accounts of Chinese sales staff. They spent the money on entertainment, gifts and cash payments, the whistleblower alleged.

Page 2 of 3 - Twenty Chinese staff were fired, the whistleblower claimed. GSK says it investigated the claims, but could not verify them. "While some fraudulent behaviour relating to expense claims was found, we did not at that time find evidence to substantiate the specific allegations,” the company said.

On March 16, 2013, GSK's London-based CEO Andrew Witty received an email containing a video of Reilly having sex with his girlfriend in his apartment, part of a gated development that had passcards for access and closed-circuit TV for security. After some meetings at GSK's HQ in London, Reilly was given permission to hire Peter Humphrey, 58, a private detective who ran his own firm, Chinawhys. He was assigned to investigate Vivian Shi and her connections to the Chinese government. But Humphreys was not told about the existence of the sex video, nor the whistleblower emails, until much later — in late June 2013.

By July 8, Humphrey became convinced that the allegations were credible, The Sunday Times says. But on July 10, Humphrey and his Chinese-American wife were arrested by Chinese officials and have been held in detention ever since.

Reilly returned to China in an attempt to clear his name, but on May 14, 2014, was charged by the Chinese with "presiding over a web of corruption," according to The Sunday Times — even though he had been the person originally sent to China to clear it up.

Mr Reilly remains in China and, although he is not in custody, he is not allowed to leave the country, according to people familiar with the matter. He is still a GSK employee but has been replaced as China head.